Subscribe to the Bombay Chartered Accountant Journal Subscribe Now!

April 2014

[2014] 41 taxmann.com 287 (New Delhi – CESTAT) Roca Bath Room Products (P.) Ltd. vs. CCE, Jaipur

By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
Reading Time 2 mins
fiogf49gjkf0d
Pre-deposit waiver – Reversal of CENVAT credit in respect of inputs, input services used in manufacture of non-dutiable capital goods used and thereafter sold as scrap.

Facts:
The Appellant, a manufacturer of sanitary-ware made Plaster of Paris (POP) moulds. For the manufacture of POP moulds, it used propane gas and input services in respect of which the CENVAT credit was taken. After its use, the POP moulds were sold as waste. The department was of the view that since, in respect of manufacture of POP moulds, CENVAT credit on inputs and input services has been availed, as per the provisions of Rule 3(5A) of CCR, 2004, at the time of clearance of such scrap, an amount equal to excise duty on transaction value shall be payable. The Appellant contended that, Rule 3(5A) of CCR, 2004 is applicable only where the CENVAT credit taken on capital goods have been cleared after use, as scrap, while in this case, neither any duty has been paid on POP moulds nor credit of that duty has been taken; that POP scrap is non-excisable and hence in any case, no duty is payable on POP scrap.

Held:
Tribunal held that, prima facie, Rule 3(5A) of CCR, 2004 applies to those cases where the CENVAT credit was availed on capital goods after use in the factory are cleared as scrap and waste and only in such situation an amount equal to the duty on transaction value of such scrapped capital goods is required to be reversed. In this case, POP moulds cannot be said to be cenvated capital goods, as the CENVAT credit has been taken of the duty/service tax paid on inputs/input services, not of excise duty on POP moulds. Accordingly pre-deposit of duty, interest and penalty was waived.

You May Also Like